Are Temporary Full-Time Employees Eligible for Benefits?

To manage insurance and benefit costs, employers often structure their benefits plans to differentiate employee populations regarding their level of benefits. Part-time employees generally are not eligible for benefits, but many businesses often have questions about the eligibility requirements for temporary and seasonal full-time employees.

Temporary full-time employees are typically eligible for benefits when they work for at least 30 hours per week and are hired into a position for less than 12 months.

Employee eligibility depends on several factors, including whether the temporary work is paid or unpaid, if they are seasonal or variable-hour workers, and whether the size of your company applies for regulations under the Affordable Care Act (ACA). Federal laws do not require you to provide the same benefit coverage to all employees, but, some states have laws and requirements on certain benefits, like paid sick leave, that apply to every employee.

In this post, we will define the different types of temporary full-time employees and explain when these employees are eligible for benefits.

What Is a Temporary Full-Time Employee?

Temporary full-time employees (called short-term employees in the ACA) are typically eligible for the same benefits as regular full-time employees. So, employers need to know how to classify these workers.

The IRS defines a temporary full-time employee as an employee who works at least 30 hours per week on average (130 hours of service per month) and accepts a position for less than one year.

To avoid potential penalties, applicable large employers (ALEs), with 50+ employees, should understand which temporary employees are “full-time” under the ACA and therefore eligible for benefits. Even if you have fewer than 50 full-time employees, you may need to comply with ACA requirements surrounding full-time equivalent employees.

The IRS does not allow exemptions for penalties for variable-hour, seasonal, temporary/short-term employees, unless the employee meets specific requirements applicable for each type. However, non-employees like 1099s and independent contractors are not categorized as "employees" under the ACA, so they do not require health benefits. In addition, volunteer and student employees may be excluded.

Variable-Hour Employees

If you are unsure at the time you hire an employee whether they will work full-time hours, they can be deemed a variable-hour employee. Employees with variable hours may be considered full-time, benefits-eligible employees if they work 30-plus hours per week on average.

Applicable large employers can identify which variable-hour employees should be eligible for benefits by:

• Calculating average weekly hours worked during a look-back measurement period, such as six or 12 months, to establish an employee’s eligible or ineligible status.
• Locking in the employee’s status for a subsequent stability period of several months, regardless of the number of hours worked during the stability period.

Seasonal Employees

A seasonal employee is hired into a position where the typical annual employment is less than six months and occurs during the same part of the year, such as winter or summer.

For seasonal employee eligibility, employers should use the initial measurement period, even if they work more than 30 hours per week. New seasonal employees are treated similarly to new variable-hour employees, using the look-back measurement period.

It is possible for interns or temporary workers to fit into these exempt seasonal or variable-hour categories. Employers should consult a benefits broker, health insurance agent and/or legal counsel for clarification around categorizing these different groups of employees.

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How Long Can I Employ a Temporary Full-Time Employee Without Offering Them Benefits?

The ACA requires applicable large employers to either offer health insurance benefits to its full-time employees or pay a fine. Temporary workers who are not variable-hour or seasonal employees and work 30 hours a week should be classified as full-time, benefits-eligible employees.

You can employ a temporary full-time employee for a maximum 90 days without offering them benefits by creating a separate class for specific temporary workers or interns. Within the 90 day waiting period, an ALE should offer coverage to temporary employees or interns who you anticipate will work full-time hours. See separate classes below.

Using the look-back measurement, employers can take three to 12 months from the hiring date to evaluate an employee’s status before making an offer of coverage. But, if the temporary employee works 30-plus hours per week during this time, employers need to offer benefits.

If you fail to offer health coverage to seasonal employees during an initial measurement period, you are generally not liable for ACA penalties, even if they end up working full-time hours during that period.

For an ALE, failure to offer minimum essential coverage to 95% of full-time employees can carry a penalty of $2,500 per year for every employee. If you meet the 95% threshold but still do not offer coverage to certain workers, a penalty of $3,750 per year could apply for each employee.

Can I Provide Benefits to a Temporary Full-Time Employee?

Large employers can establish separate employee classes to deal with benefits for temporary workers or interns with the 90 day waiting period. Due to this short-term employment, many of these employees do not satisfy the waiting period before leaving the company, therefore never becoming eligible for coverage.

For employers that are not ALEs under the Affordable Care Act, determining whether temporary employees should receive benefits requires reviewing the terms of their contract and state regulations. Here are questions to consider:

What are your provisions for eligibility? Do the temporary full-time employees meet those requirements? Do they have exclusions for seasonal or variable-hour work?

The answers will help you determine eligibility under your benefits plan for temporary employees.

Human resources professionals implementing benefit plans should assess their employee population to understand who is eligible. And remember, when establishing separate classes of employees for benefits, it is imperative to remain compliant with HIPAA nondiscrimination rules.

Of course, each hiring situation is different, and staffing agencies frequently work with employers to provide temporary benefits. A benefits broker can help you decide when your employees are eligible for benefits in each situation.

Want to see how your comprehensive benefits package compares to companies like yours nationwide? Take our Employee Benefits Scorecard Quiz.

Interested in reading more relatable content? Read Everything You Need to Know About Offering Employees Health Insurance.

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